In this assignment I analysed the cash flow problems a business might experience. Furthermore, I justified the actions a business might take when experiencing cash
flow problems. This assignment fully meet the criteria imposed by the teacher and also by the assignment brief.
Now I am going to analyse the cash flow forecast that I compiled for
Alan Hull’s business by evaluating any issues that can be identified
through this cash flow forecast, and commenting on important
aspects of the financial forecast before making any
recommendations for improvements. To begin this analysis, first of
all I am going to identify some of the key aspects of his cash flow
forecast before determining any issues that could be problematic for
the business in the future.
The main problem when a business might experience with a cash
flow forecast.
The biggest problem that a business faces when uses a cash flow
forecast is that it cannot anticipate the unexpected events that a
business may face. For example cash flow forecast cannot anticipate
the problems that a business can have with the equipment, vehicles
and machineries in the future.
A cash flow forecast cannot anticipate the changes that the
government can make during a year. (Changes in VAT rates, changes
in Laws, etc.). Any changes in Laws or VAT affect in some degrees a
company. For example if the VAT rate will be increased from 20% to
25%, Alan will have to spend a larger amount of money on the
purchases because he will have to pay more on the VAT. Also if the
VAT is increased, the price of the goods that Alan’s shop sell will
increase too, so the customers’ attitude and behavior on purchase
will be changed, so the sales will have to suffer the consequences.
Another event that cannot be anticipated by the cash flow forecast
is represented by the base interest rate which is changed every
month by the Bank of England. Many businesses have loans from
banks and if the interest rate increases will lead to extra costs for
the businesses which have loans based on interest rate.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Eldermaniac. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £7.39. You're not tied to anything after your purchase.